Wednesday 29th July 2020
Contact: divestparliament@gmail.com and 07946 054 273
More than 70 prominent civil society leaders – including MPs, NGO directors, faith leaders and local councillors – have signed an open letter rebutting the Pensions Minister Guy Opperman’s public support of continued fossil fuel investments [1].
[Westminster, UK] In an article published in the Telegraph and on GOV.UK on 7th July [2], Pension Minister Guy Opperman argues that investors with environmental concerns should hold onto their stocks in oil and gas companies so that they can “nudge, cajole or vote firms towards lower-carbon business practices.”
In response, more than 60 prominent civil society leaders – including Green Party MP Caroline Lucas, Dr Rowan Williams and Sir Mark Rylance – have signed an open letter criticising Mr Opperman for ignoring the “clear moral, scientific and financial arguments for fossil fuel divestment”. The signees highlight that fossil fuel companies work against international efforts to tackle global heating:
“Despite clear evidence that we need to leave fossil fuels in the ground, companies such as Shell and Exxon are planning to significantly expand fossil fuel extraction by 2030. For every £1 invested by fossil fuel majors, over 95p ends up in further expansion of oil and gas reserves that are incompatible with a Net Zero trajectory.” [3]
In response to the Minister encouraging investors to practice “constructive engagement” with fossil fuel companies, the letter states:
“Mr Opperman’s assertion that collaboration through investor engagement can turn fossil fuel majors into low-carbon companies is not borne out by evidence. Investor pressure has never reshaped any company’s core business and cannot transform an entire sector of powerful multinationals.”
The letter is supported by financial expert Mark Campanale of the Carbon Tracker Initiative and emphasises that divestment also helps protect people’s pensions from financial risk. UN special envoy for climate action and finance Mark Carney [4], the G20’s Financial Stability Board and the Environmental Audit Committee have repeatedly warned that UK investors run the risk of exposing themselves to ‘stranded assets’ as fossil fuel stocks are made worthless by the inevitable transition to renewables.
Mr Opperman’s explicit and public support of continued fossil fuel investment by pension funds flies in the face of the rapidly growing divestment movement and rising consumer demand for fossil free pensions. Current Government guidance to pension fund trustees lists divestment as an appropriate strategy for trustees wanting to take positive action to tackle climate change [5], and a growing number of local authorities have acted upon this – including Lambeth, Islington, Newcastle City and Merseyside. Most recently, Conservative-led Shropshire Council unanimously passed a motion to completely divest from fossil fuels by 2023 [6].
In Westminster, 360 serving and former cross party MPs have backed phasing out fossil fuel investments from the Parliamentary Pension Fund, including Labour leader Sir Keir Starmer, DEFRA Minister Rebecca Pow and Committee on Climate Change Chair Lord Deben.
ENDS
For more information please contact: divestparliament@gmail.com and 07946 054 273
Notes to editors
[1] The open letter text and full list of confirmed signatories is available here. Other notable signatories include Greenpece Executive Director John Sauven, Liberal Democrat MP Layla Moran, the chairs of 3 local authority pensions funds (Merseyside, Islington and Lambeth) and Kevin Anderson, Professor of Energy and Climate Change, The Tyndall Centre.
[2] The Pension Minister’s anti-divestment Telegraph article is available here and a free full text version is on gov.uk here.
[3] Exploration for new oil and gas reserves by fossil fuel majors has been extensively documented. For example, recent research by Rystad Energy (summarised here) highlighted that both Shell PLC and ExxonMobil plan to increase oil and gas production by more than 35% between 2018 and 2030.
No fossil fuel company dedicates more than 5% of its capital expenditure to low-carbon solutions such wind or solar energy, and the remainder is used to develop new reserves of oil and gas – as summarised by Financial Times here and Reuters here.
[4] In this recent Financial Times article available here, Mark Carney acknowledged that the escalating climate crisis necessitates aggressive reductions in greenhouse emissions, with major risk implications for the valuation of high-emissions companies such as fossil fuel majors and those who invest in these companies.
[5] Government guidance for pension fund trustees (available here) on adhering to the recommendations of the Taskforce for Climate-Related Financial-Disclosures lists divestment as one course of action for funds “seeking to demonstrate leadership”. The Pension Minister has also previously praised the “shift away from fossil fuels” e.g. this comment piece in the Daily Telegraph from July 2019.
[6] Local press coverage of Shropshire Council’s unanimous divestment motion from 16th July available here.
